Correlation Between CompoSecure and First Community

Can any of the company-specific risk be diversified away by investing in both CompoSecure and First Community at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CompoSecure and First Community into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CompoSecure and First Community, you can compare the effects of market volatilities on CompoSecure and First Community and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CompoSecure with a short position of First Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and First Community.

Diversification Opportunities for CompoSecure and First Community

0.61

Correlation Coefficient

CompoSecure  First Community

Poor diversification

The 3 months correlation between CompoSecure and First is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and First Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community and CompoSecure is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CompoSecure are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community has no effect on the direction of CompoSecure i.e., CompoSecure and First Community go up and down completely randomly.

Pair Corralation between CompoSecure and First Community

Assuming the 90 days horizon CompoSecure is expected to generate 3.73 times more return on investment than First Community. However, CompoSecure is 3.73 times more volatile than First Community. It trades about 0.3 of its potential returns per unit of risk. First Community is currently generating about 0.11 per unit of risk. If you would invest  395.00  in CompoSecure on April 26, 2025 and sell it today you would earn a total of  294.00  from holding CompoSecure or generate 74.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CompoSecure  vs.  First Community

CompoSecure

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CompoSecure are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CompoSecure showed solid returns over the last few months and may actually be approaching a breakup point.

First Community

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Community are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, First Community is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CompoSecure and First Community

The main advantage of trading using opposite CompoSecure and First Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompoSecure position performs unexpectedly, First Community can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Community will offset losses from the drop in First Community's long position.

The idea behind CompoSecure and First Community pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.